Mobile phone groups including Vodafone are not eligible for billions in tax rebates linked to auction of 3G licences during the dot-com boom, the European Union's highest court ruled this morning.

The ruling, which follows a four-year court battle, means that the UK Treasury will not have to pay out on rebate claims of about £3.3 billion after raising some £22.5 billion from auctioning five 3G licenses.

A spokesman for Vodafone said it was too early to say whether the mobile operators could take the case further. The company's executives will be meeting with the other four mobile operators who brought the case — Hutchison Whampoa's 3; Telefonica's O2, Deutsche Telekom's T-Mobile and France Telecom's Orange — to discuss the next step.

The ruling will set a precedent across Europe, lawyers said, where auctions for the licences raised more than £50 billion for European governments as mobile phone operators bet that the technology would encourage its customers to spend more on accessing the internet over their mobiles.

In fact the roll out of useable 3G handsets has been beset by technical glitches and 3G mobiles have still not taken off in a big way in the UK and Europe, nor have they yet generated much extra revenue for the mobile companies.

The operators that won the licences have since argued that the fees paid included refundable value-added tax.

However, the Grand Chamber of the European Court of Justice, the EU's final court of appeal, today ruled against those claims.

The court's Advocate General, Juliane Kokott, had previously said that governments had acted as public authorities and as such their actions were exempt from VAT.

The mobile operators spent more than €39 billion on the 3G licences in the UK and Austria alone.

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